Identifier
Created
Classification
Origin
08ASTANA1865
2008-09-24 11:16:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Astana
Cable title:  

KAZAKHSTAN - ATYRAU OIL REFINERY LOOKS TO UPGRADE

Tags:  EPET EINV PGOV KZ 
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VZCZCXRO0434
OO RUEHAST RUEHBI RUEHCI RUEHLH RUEHLN RUEHPW RUEHVK RUEHYG
DE RUEHTA #1865 2681116
ZNR UUUUU ZZH
O 241116Z SEP 08
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3389
INFO RUCNCIS/CIS COLLECTIVE 0642
RUCNCLS/SOUTH AND CENTRAL ASIA COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHDC
UNCLAS ASTANA 001865 

SENSITIVE
SIPDIS

STATE PASS TO TDA FOR DAN STEIN
ENERGY FOR TYLER TILLER, COMMERCE FOR DANICA STARKS

E.O. 12958: N/A
TAGS: EPET EINV PGOV KZ
SUBJECT: KAZAKHSTAN - ATYRAU OIL REFINERY LOOKS TO UPGRADE

UNCLAS ASTANA 001865

SENSITIVE
SIPDIS

STATE PASS TO TDA FOR DAN STEIN
ENERGY FOR TYLER TILLER, COMMERCE FOR DANICA STARKS

E.O. 12958: N/A
TAGS: EPET EINV PGOV KZ
SUBJECT: KAZAKHSTAN - ATYRAU OIL REFINERY LOOKS TO UPGRADE


1. (SBU) Charge and Energy Officer met with Kairat Urazbayev, First
Deputy General Director of the Atyrau oil refinery, on September 18
and toured the refinery's processing facilities. The original plant
was built in 1936, but was upgraded most recently in 2006. It is
therefore, said Urazbayev, both the oldest and the most modern
refinery in Kazakhstan. Some processing equipment was provided by
the U.S. in 1945-7 as part of the lend-lease program and the
refinery underwent a major reconstruction project in the 1970s. In
1995, the refinery contracted with a U.S. firm, Honeywell subsidiary
UOP, to rebuild the diesel refinery facility. UOP supplied
catalyzers for catalytic reforming and provided technology for
hydrofining and dewaxing diesel fuel. The total cost of the rebuild
-- including equipment made and assembled by Japan's JDC Corporation
-- was $400 million. Urazbayev said the Atyrau refinery is eager to
do more business with U.S. companies and is planning a $1 billion
modernization project. According to an unnamed source at
KazMunaiGas's Trading House subsidiary, which owns 100% of the
Atyrau refinery, it will take five years and up to $2.5 billion in
order to bring the Atyrau refinery up to Western European standards.
The other two major refineries in Kazakhstan -- in Pavlodar and
Shymkent -- are also currently undergoing renovation.


2. (SBU) In 2007, the Atyrau refinery operated at 70% of capacity,
processing 3.8 million tons of crude, the highest level in the last
ten years. In 2008, they expect to process 4 million tons of crude
and in 2009, 5 million tons. The customs duty on the export of
Kazakhstani crude oil has been a boon to business. As Urazbayev
said with a smile, "It has had some small positive effect." (Note:
The government has justified the crude oil export duty in part by
claiming it will increase the supply of crude to domestic
refineries, thereby promoting value-added processing in Kazakhstan
and stabilizing the domestic price of gasoline. End Note.)
Currently, most of the oil the refinery receives for processing
derives from Kazakhstan's oldest oil producing field, in Uzen;
additional crude comes from Kusk-Kumkol and Russia.


3. (SBU) Over the past several years, the refinery has adjusted its
product lines to meet European quality standards and World Trade
Organization commitments. During Soviet times, 50% of the
refinery's output was mazut, a low-quality fuel oil used mainly in
power plants; now mazut makes up less than one-third of the
refinery's product mix. When asked about Minister of Energy
Mynbayev's remarks on September 4 that there is insufficient
domestic refinery capacity, Urazbayev said the Atyrau refinery has
no difficulty meeting all of the domestic demand in western
Kazakhstan for refined products and in fact exports some of their
finished products to Russia. When asked about transportation by
rail, Urazbayev confirmed that they do not have enough railway cars
and said "we could really use more rail cars."


4. (SBU) There are constraints to the plant's ability to expand
because they are located within the Atyrau city limits, but they are
considering building a new plant in a new location farther from the
city center. Urazbayev said the refinery is eager to offer its
services to process up to 1 million tons of sulfur from
Tengizchevroil (TCO) and has sent several business proposals to TCO,
but has not received a response. The refinery has one continuous
gas flare from sour gas separation operations and two other gas
flare stacks available on standby in case of emergency. (Note: When
asked about the Atyrau refinery, Steve Rose, ExxonMobil Kazakhstan's
General Manager, said it is the biggest polluter in the oblast and
he "wouldn't touch it with a ten-foot pole." End Note.)

MILAS